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The Wall Street Journal featured an article called "States Draw Fire for Pitching Citizens on Private Long Term Care Insurance" on February 26, 2008. The article discusses the Long Term Care Partnership Program recently approved in Colorado and many other states. http://www.dora.state.co.us/INSURANCE/regs/B-4.27.pdf
While the partnership program is still under review with many details yet to be finalized, a basic explanation of the program is that individuals who purchase "qualified" long term care insurance plans and use the funds from the plans for care will be able to retain an equal amount of funds personally not subject to Medicaid provisions. For example, you have a LTCI policy worth $500,000. You exhaust the funds in the policy for your care and you have $500,000 in investments. The $500,000 in investments is not subject to the asset eligibility, adjustment and recovery provisions of the state's Medicaid plan, it's yours to keep and spend according to your wishes.
One of the opinions in the WSJ article is that states are pushing individuals who cannot LTC premiums to purchase policies. Additionally, some states are pushing policies from providers who have raised annual policy costs by as much as 700% so that the policies then become unaffordable for the individuals who purchased them. State officials on the other hand applaud the program because it pushes responsibility for long term care needs back to the consumer.
The downside of the program relates mainly to those of us who were proactive in already purchasing long term care policies. It's unlikely that these policies will qualify under the Long Term Care Partnership program. For persons in this group it is probably not feasible to apply for a new policy qualifying under the program because either premiums would be greater or due to health reasons an individual who qualified 5 years ago may not qualify again.
Regardless, there will be increased press on this topic as the guidelines continue to be developed. It's true that the government can't continue to fund healthcare. We have an ever growing national deficit. The only way consumers will take control of their healthcare future is to change their spending habits and make healthcare and long term care insurance a priority instead of a cup of coffee at Starbucks every morning.
Copyright 2011 Pamela D. Wilson, All Rights Reserved.
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